Ambrose Evans-Pritchard has covered world politics and economics for 30 years, based in Europe, the US, and Latin America. He joined the Telegraph in 1991, serving as Washington correspondent and later Europe correspondent in Brussels. He is now International Business Editor in London. Subscribe to the City Briefing e-mail.

HSBC’s stress test includes a 50pc house price crash in China and Hong Kong

Mainland China suffers a 50pc reduction in property prices as an initial modest price decline becomes self-reinforcing through a deterioration in investor sentiment.

Mainland China equity prices fall by around 25pc and unemployment doubles to 7pc.

Mainland China GDP growth averages 3pc per annum in the two years following the crisis.

Hong Kong property and equity prices fall by around 50pc.

Just a stress test, mind you, not a forecast.

As I reported yesterday, Nomura has pinned its colours the mast with a dire report on China’s housing glut. “We believe that a sharp property market correction could lead to a systemic crisis in China, and is the biggest risk China faces in 2014. The risk is particularly high in third and fourth-tier cities, which accounted for 67pc of housing under construction in 2013,” it said.

So we now have three potential triggers in China: shadow banking trusts, local government entities, and a property bust. Life being what it is we may get all three at once.

It matters. China’s $24 trillion credit nexus has grown to be as large as the entire US and Japanese commercial banking systems combined. We are all captives of Chinese credit loan saga now.